The track record of previous iPad competitors is dismal at best:
Hewlett Packard's (NYS: HPQ) TouchPad? A debacle that couldn't sell until HP slashed prices below what you'd pay on Amazon for the boxed collection of Xena: Warrior Princess. At its final fire-sale prices, HP was losing about over $200 per TouchPad sold.
Research In Motion's (NAS: RIMM) PlayBook? Heading for the bargain bin. The company is preparing price cuts and shipped only 200,000 units last quarter. Apple (NAS: AAPL) moves that amount of iPads in about two days.
Google's (NAS: GOOG) Android? Can't gain traction. Even looking at shipment figures, the iPad controls 68.3% of the tablet market, with Android struggling to capture only 26.8%. The problem with shipment figures? They track shipments to stores, but not end sales to customers. Apparently, Android tablets aren't selling well once they hit store shelves.
However, all indications suggest that Amazon is going a different route than other failed iPad rivals of days past.
For one, it's not going to fall into the same trap of being unable to undercut the iPad's price. Both HP and Research In Motion launched at pricing levels that didn't undercut entry-level iPads. The highly touted Motorola (NYS: MMI) Xoom launched at a price level above the iPad.
Amazon's not going to get into the fool's game of trying to compete with Apple's aggressive pricing and features. Instead, it's going a cheaper route: Don't be surprised if its tablet is priced at an extremely aggressive price point. Rumors have pointed to as low as $250. That'll come with some concessions on the horsepower and features of the device, but it'll also set a price point low enough to get consumers interested.
Second, the tablet will finally be differentiated from other offerings. Android has notoriously been behind Apple when it comes to media offerings. The iPad (and other iDevices) were built to connect and sync easily with iTunes so users could effortlessly manage a collection of movies and songs. Android devices' management of media has always been clunky at best.
This is an area that Amazon's tablet could immediately improve on. The company has invested in building out its digital-download offerings, creating a cloud-based media-storage service, and sometimes offering popular music albums at fire-sale prices to attract users. Further, it could bundle Prime with the tablet in some form to create a beachhead for users to try its yearly service. That could also boost adoption of its streaming service, which now boasts 11,000 titles and is quickly becoming the greatest challenge to Netflix (NAS: NFLX) .
Third, the tablet should also feature heavy integration with e-books and carry the branding of Amazon's enormously successful Kindle line. Numerous reports say that Amazon's tablet will be called the Kindle Fire.
Combine all these factors, and Amazon definitely has the ingredients for success. It'll be able to price the tablet so cheaply because it'll feature so many opportunities for later digital sales through Amazon itself. The tablet will also have the advantage of huge levels of promotion across Amazon's website. Amazon's had the Kindle placed on the front page of its site for years -- expect a similar push to make its tablet a blowout success as well.
Whatever Amazon announces tomorrow, make sure to come back to Fool.com for a full day of coverage. I'll be attending Amazon's press conference and will be blogging live as well as publishing an article after its unveiling.
Here are two ways to make sure you don't miss a thing. First, add Amazon.com to our free My Watchlist service, which will deliver all the day's news and continuing analysis on Amazon.com.
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Second, you can set a reminder to head back to Fool.com for our live blogging from Amazon's press conference tomorrow.
We hope to see you back on Fool.com tomorrow as we dissect what Amazon's plans mean for the future of tablets.
At the time thisarticle was published Eric Bleeker owns shares of no companies listed above. You can follow Eric on Twitter to see all of his technology and market commentary. The Motley Fool owns shares of Apple, Google, and Research In Motion. Motley Fool newsletter services have recommended buying shares of Google, Netflix, Apple, and Amazon.com. Motley Fool newsletter services have recommended creating a bull call spread position in Apple and a bear put spread position in Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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